Bill Johnson Restaurants, Inc v. National Labor Relations Board, 81-2257

• Decision Date: 31 May 1983
• Docket Number: No. 81-2257,81-2257
• Parties: BILL JOHNSON'S RESTAURANTS, INC., Petitioner v. NATIONAL LABOR RELATIONS BOARD
• Court: U.S. Supreme Court

461 U.S. 731

103 S.Ct. 2161

76 L.Ed.2d 277

BILL JOHNSON'S RESTAURANTS, INC., Petitioner

v NATIONAL LABOR RELATIONS BOARD.

No. 81-2257.

Argued March 29, 1983.

Decided May 31, 1983.

Syllabus

After one Helton, a waitress at petitioner's restaurant, filed unfair labor practice charges with the National Labor Relations Board (NLRB) alleging that she had been fired because of her efforts to organize a union, Helton and others, including other waitresses, picketed the restaurant and distributed leaflets. Petitioner and three of its co-owners then filed a suit for damages and injunctive relief against Helton and the other demonstrators in an Arizona state court, alleging that the defendants had harassed customers, blocked access to the restaurant, created a threat to public safety, and libeled plaintiffs by false statements in the leaflets. On the following day, Helton filed a second charge with the NLRB, alleging, inter alia, that petitioner had filed the civil suit in retaliation for the defendants' protected, concerted activities and the filing of charges against petitioner with the NLRB. After a consolidated hearing on the unfair labor practice complaints, an Administrative Law Judge (ALJ) concluded that, "on the basis of the record and from [his] observation of the witnesses," the evidence failed to support the allegations of the complaint in the state-court action, and that such action thus lacked a "reasonable basis" and its prosecution was retaliatory, in violation of §§ 8(a)(1) and (4) of the National Labor Relations Act (Act). On petitioner's appeal, the NLRB adopted, with minor exceptions, the ALJ's findings and recommendations, and ordered petitioner to withdraw its state-court complaint. The Court of Appeals enforced the NLRB's order.

Held:

1. The NLRB may not halt the prosecution of a state-court lawsuit, regardless of the plaintiff's motive, unless the suit lacks a reasonable basis in fact or law. Retaliatory motive and lack of reasonable basis are both essential prerequisites to the issuance of a cease-and-desist order against a state suit. Pp. 740-744.

(a) The filing and prosecution of a well-founded lawsuit may not be enjoined as an unfair labor practice, even if it would not have been commenced but for the plaintiff's desire to retaliate against the defendant for exercising rights protected by the Act. The Act's provisions guaranteeing employees the enjoyment of their rights to unionize, engage in concerted activity, and utilize the NLRB's processes without fear of coercion or retaliation by their employer are to be liberally construed. However, countervailing considerations against allowing the NLRB to condemn the filing of a suit as an unfair labor practice include the First Amendment right of access to the courts and the States' compelling interests in maintaining domestic peace and protecting its citizens' health and welfare. Thus, the NLRB's interpretation of the Act that the only essential element of a violation by the employer is retaliatory motive in filing a state-court suit is untenable. Pp.740-743.

(b) However, it is an enjoinable unfair labor practice to prosecute a baseless lawsuit with the intent of retaliating against an employee for the exercise of rights protected by the Act. Such suits are not within the scope of First Amendment protection, and the state interests noted above do not enter into play when the suit has no reasonable basis. Pp. 743-744.

2. In determining whether a state-court suit lacks a reasonable basis, the NLRB is not limited to considering the bare pleadings in the suit, but its inquiry must be structured in a manner that will preserve the state plaintiff's right to have a state-court jury or judge resolve genuine material factual or state-law legal disputes pertaining to the lawsuit. Therefore, if the NLRB is called upon to determine whether a suit is unlawful prior to the time that the state court renders final judgment, and if the state plaintiff can show that such genuine material factual or legal issues exist, the NLRB must await the results of the state-court adjudication with respect to the merits of the state suit. If the state proceedings result in a judgment adverse to the plaintiff, the NLRB may then consider the matter further and, if it is found that the lawsuit was filed with retaliatory intent, the NLRB may find a violation and order appropriate relief. Pp.744-747.

3. This case must be returned to the NLRB for further consideration in light of the proper standards. It was not the ALJ's province, based on his own evaluation of the evidence, to determine that the libel and business-interference counts in petitioner's state-court suit were in fact without merit. He should have limited his inquiry to the question whether petitioner's evidence raised factual issues that were genuine and material. Furthermore, because, in enforcing the NLRB's order, the Court of Appeals ultimately relied on the fact that "substantial evidence" supported the NLRB's finding that the prosecution of the lawsuit violated the Act, the NLRB's error has not been cured. Pp. 747-748.

660 F.2d 1335 (9th Cir.1981), vacated and remanded.

Lawrence Allen Katz, Phoenix, Ariz., for petitioner.

Carolyn F. Corwin, Washington, D.C., for respondent.

Justice WHITE delivered the opinion of the Court.

We must decide whether the Board may issue a cease-and-desist order to halt the prosecution of a state court civil suit brought by an employer to retaliate against employees for exercising federally-protected labor rights, without also finding that the suit lacks a reasonable basis in fact or law.

I

The present controversy arises out of a labor dispute at "Bill Johnson's Big Apple East," one of four restaurants owned and operated by the petitioner in Phoenix, Arizona. It began on August 8, 1978, when petitioner fired Myrland Helton, one of the most senior waitresses at the restaurant. Believing that her termination was the result of her efforts to organize a union, she filed unfair labor practice charges against the restaurant with the Board.

On September 20, after an investigation, the Board's General Counsel issued a complaint. On the same day, Helton, joined by three co-waitresses and a few others, picketed the restaurant. The picketers carried signs asking customers to boycott the restaurant because its management was unfair to the waitresses. Petitioner's manager confronted the picketers and threatened to "get even" with them "if it's the last thing I do." Petitioner's president telephoned the husband of one of the picketing waitresses and impliedly threatened that the couple would "get hurt" and lose their new home if the wife continued to participate in the protest. The picketing continued on September 21 and 22. In addition, the picketers distributed a leaflet that accused management of making "[u]nwarranted sexual advances" and maintaining a "filthy restroom for women employees." The leaflet also stated that a complaint against the restaurant had been filed by the Board and that Helton had been fired after suggesting that a union be organized.

On the morning of September 25, petitioner and three of its co-owners filed a verified complaint against Helton and the other demonstrators in an Arizona state court. Plaintiffs alleged that the defendants had engaged in mass picketing, harassed customers, blocked public ingress to and egress from the restaurant, and created a threat to public safety. The complaint also contained a libel count, alleging that the leaflet contained false and outrageous statements published by the defendants with the malicious intent to injure the plaintiffs. The complaint sought a temporary restraining order and preliminary and permanent injunctive relief, as well as compensatory damages, $500,000 in punitive damages, and appropriate further legal and equitable relief. App. 3-9. After a hearing, the state court declined to enjoin the distribution of leaflets but otherwise issued the requested restraining order. App. 19-23. Expedited depositions were also permitted. The defendants retained counsel and, after a hearing on the plaintiffs' motion for a preliminary injunction on November 16, the court dissolved the temporary restraining order and denied preliminary injunctive relief. App. 52.

Meanwhile, on the day after the state-court suit was filed, Helton filed a second charge with the Board alleging that petitioner had committed a number of new unfair labor practices in connection with the dispute between the waitresses and the restaurant. Among these was a charge that petitioner had filed the civil suit in retaliation for the defendants' protected, concerted activities, and because they had filed charges under the Act. The General Counsel issued a complaint based on these new charges on October 23. As relevant here, the complaint alleged that petitioner, by filing and prosecuting the state suit, was attempting to retaliate against Helton and the others, in violation of §§ 8(a)(1) and (4) of the National Labor Relations Act (NLRA or Act), 29 U.S.C. §§ 158(a)(1) and (4).¹

In December 1978, an Administrative Law Judge (ALJ) held a four-day consolidated hearing on the two unfair-labor-practice complaints.² On September 27, 1979, the ALJ rendered a decision concluding that petitioner had committed a total of seven unfair labor practices during the course of the labor dispute. 249 N.L.R.B. 155, 168-169 (1980). With regard to the matter presently before us, the ALJ agreed with the General Counsel that the prosecution of the civil suit violated §§ 8(a)(1) and (4). The ALJ applied the rationale of Power Systems, Inc., 239 N.L.R.B. 445, 449-450 (1978), enforcement denied, 601 F.2d 936 (CA7 1979), in which the Board held that it is an unfair labor practice for an employer to institute a civil lawsuit for the purpose of penalizing or discouraging its employees from filing charges with the Board or seeking access to the Board's processes.

In Power Systems,...